Twinkie cliff avoided? Hostess and bakers agree to mediation

posted at 8:31 pm on November 19, 2012 by Mary Katharine Ham

Yes, there’s been lots of focus on the fate of Twinkies lately, perhaps more than on the similar troubles of the country’s finances. Please consider this your delicious, non-nutritious proxy fight featuring a badly managed, inefficient leadership structure losing cash by the truck-full, held hostage by a thousand financial obligations it made to a thousand constituencies it can’t possibly bring in enough money to satisfy! Yum! As a nation, we’re simply chowing down on our empty-calories disaster dessert before we get to the fiscal cauliflower cliff. Or something.

Hostess Brands Inc. and its second largest union will go into mediation to try and resolve their differences, meaning the Irving, Texas-based company won’t go out of business just yet. The news came Monday after Hostess moved to liquidate and sell off its assets in bankruptcy court citing a crippling strike last week.

The bankruptcy judge hearing the case says that the parties haven’t gone through the critical step of mediation and asked the lawyer for the bakery’s union to ask his client, who wasn’t present, if he would agree to participate.

The judge noted that the bakery union went on strike after rejecting the company’s latest contract offer, even though it never filed an objection to it.

“Many people, myself included, have serious questions as to the logic behind this strike,” said Judge Robert Drain, who heard the case in the U.S. Bankruptcy Court in the Southern District of New York in White Plains, N.Y. “Not to have gone through that step leaves a huge question mark in this case.”

Many on Twitter are alleging this was some kind of marketing ploy in which greedy Hostess feigned failure, drove up demand, and then revealed its true solvency. But it sounds like the judge is taking issue with the unions’ actions, not Hostess’, and this company has been in dire straits for quite some time. The Teamsters presumably aren’t in the habit of agreeing to eight-percent pay cuts unless they recognize asking for more would truly be a kamikaze mission.

The saddest person here may be Paul Krugman, who will be crushed to know we don’t get to raise the top marginal tax rate to 91 percent to save these iconic confections.

As for me, I had it on good authority the only thing that could save an iconic American brand from extinction was $60 billion in taxpayer money. This process, though painful at times, seems way cheaper.

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